United Natural buys Tony's Fine Foods for $195 mln

BenFox

United Natural Foods Inc. agreed to buy fellow specialty-foods distributor Tony's Fine Foods for about $195 million, expanding its footprint in the western U.S. and growing its offerings in cheeses, deli and bakery foods.

Founded in 1934, Tony's products are sold primarily to retail and specialty grocers, food service customers and other distribution companies. For the fiscal year ended in September, Tony's generated about $714 million in sales.

The deal is expected to close in United Natural's fourth quarter, which ends around July, and should benefit earnings next fiscal year. The total purchase price will consist of about $188 million in cash and 112,000 shares of United Natural stock. Tony's shareholders will use some of the proceeds from the sale to pay off all of Tony's existing debt at closing.

Deal making in the food sector has surged in the past two years as companies contend with a menu of stubborn challenges. The growing clout of giant retailers in the grocery business, especially Wal-Mart Stores Inc., has crimped the pricing power of packaged-food producers.

Also on Thursday, Unilever PLC said it would sell its North American pasta-sauces business under the Ragu and Bertolli brands to Japan's Mizkan Group for $2.15 billion, accelerating Unilever's move away from its once-core foods business.

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